Investec Targets A$2 Billion of Australian Wind Farms

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Investec, the South African investment bank, intends to develop more than A$2 billion ($1.7 billion) of wind-power projects in Australia to tap a government program encouraging increased use of renewable energy

The bank won planning approval this week for a A$700 million venture in Western Australia and is seeking clearance for a A$210 million project in Victoria state, said Mark Headland, responsible for renewable energy developments at the bank’s Australian unit. Those will be followed by a larger project, costing at least A$1.2 billion, in Queensland, he said.

Australia’s government has pledged to introduce a target to increase use of renewable energy to 20 percent of electricity supplies by 2020 to tackle global warming. Conergy AG, Origin Energy Ltd. and Mitsui & Co. are among companies seeking to gain from the clean-energy ruling, which should ensure revenue for wind and solar projects that otherwise may not be profitable.

“The government has made a commitment to increasing the renewable energy target and that means renewable energy will be a dominant player in new installed capacity in the power sector over the next 15 years,” said Karl Mallon, Sydney-based scientific and technical director at Climate Risk Pty, a climate-change risk analyst. “We expect a lot of investment coming into wind energy.”

The government has set a timetable of having its renewable energy target legislated by the middle of next year. It proposes to aim for an extra 45,000 gigawatt-hours of renewable energy supply by 2020, which, with existing supply of about 15,000 gigawatt-hours, will take 2020 use to 60,000 gigawatt-hours.

`Market Support’

“We’re very excited about the government’s impending 20 percent renewables target; it’s what drives our interest in becoming involved in these projects,” Adelaide-based Headland said late yesterday in a telephone interview. “The key to the process is obviously the market support implicit in” the regulations that will underpin the target, he said.

Investec will probably start detailed design work on the 270-megawatt Collgar project, about 295 kilometers (183 miles) east of the Western Australian capital of Perth, in the first quarter of next year, Headland said. The project will produce enough electricity to power about 160,000 homes.

Similar work should get underway on the 43-turbine Oaklands Hill project south of Glenthompson in western Victoria state about the same time, depending on approval, he said.

Coopers Gap

The two projects, Investec’s first wind energy ventures in Australia, may start operating in late 2010, Headland said. The Coopers Gap project, about 180 kilometers northwest of the Queensland capital Brisbane, will involve as many as 250 turbines and may start up in early to mid-2011, Headland said.

Investec expects to lodge a development application for the 500-megawatt Coopers Gap venture within 2-3 months after getting a “strong level of support” at a public open day last month, he said. The project will power about 249,000 homes.

The Johannesburg-based bank will “consider its options” for the final ownership of the projects, and may continue to hold 100 percent or sell stakes to partners, Headland said. The ventures may be project financed or funded from Investec’s balance sheet, he said.

Development work is being carried out with Canberra-based Windlab Systems Pty., which Investec Bank (Australia) Ltd. also partners in wind energy projects in New Zealand. Investec also has wind assets in Europe, he said.

Cost Efficient

AGL Energy Ltd., Origin and closely held TME Australia are among companies that have won approval for, or bought rights to build, wind energy projects in Australia this year, while Conergy, Germany’s largest solar power company, announced plans in October to spend A$2 billion to build the country’s biggest wind energy project. Mitsui is also studying developing a wind power business in Australia.

Wind energy will make the biggest contribution to the 2020 renewable energy target because it is able to deliver large volumes of power at a low cost compared with other technologies, Mallon said. Projects involving solar, biomass-based and geothermal energy will still be required to enable Australia to meet its goal of cutting greenhouse gas emissions by 60 percent from 2000 levels by 2050, he said.

Article by: Angela Macdonald-Smith

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